WOLAITA SODO UVIVERISTY

COLLEGE OF
® COURSE TITLE: ENTREPRENEURSHIP
® COURSE CODE : MGMT 1012
® GROUP ASSIGNMENT
® ACADAMIC YEAR 2014 E.C

INSTRUCTOR:-

Content page

Executive summary

BUSINESS PLAN OF TOP BAKERY Page i

Introduction
1. Company description of New Bakery…………………………….………………………...1

1.1Objectives of New Bakery ………………………………….………………………………1

1.2Mission of new Bakery………………………………………………………………………1

1.3 Vision of New Bakery………………………………………………………………………2

2. Considerations in Selecting the Project…………………………..…………………………..2
3. Location of Project……………………………………………….........................................2
4.Sources of capital……………………………………………………………………………..2
5.Project Infrastructure.…………………………….…....………..…………………………....3
6. Financial Analysis:………………………………….….………………………………….....3
6.1.Costs for Building …………………………..…...………………………………….…4
6.1.1 Materials Cost For Baking Process………………….……………………………....4
6.1.2. Supplies Expense……………………………..........................................................5
7.Market Analysis………………………………………………..……………………………..7
7.1market segmentation………………………………………………………………………....7
8.product or service……………………………………………………………………………...7
9.Demand forecasting……………………………………………………………………………8
10. Project Management and organization……. …………………………………………........8
10.1 Major Duties and Responsibilities………………………………..………………………..9
11. Income Statement………………………………………..….......................................10
11.1 Opening Balance Sheet …………………………………...………………………….11
11.2Balance Sheet…………………………………………….,,. …………………………11
11.3 Statement of Cash Flow…………………………………...………………………….12
12. Project Evaluation.................................................................................................................12
13. Environmental feasibility………………………………………..........................................13
14.Top bakery swot analysis…………………………………………………………………….13
15.pricing strategy………………………………………………………………………………14
16.promotion…………………………………………………………………………………....14
17. Risk assessment…………………………………………………………………….... …….14
18. Project Implementation ………………………………………….........................................14

Business plan of Top bakery

BUSINESS PLAN OF TOP BAKERY Page ii

Executive Summary
Top bakery is a private company located in Samara town in Ethiopia that establish
in 2014 E.C with a start capital of 500,000 birr which financed from individual
investment and loan of Ethiopian commercial banks. It produces a quality of
bakery commonly bread and distributes to the people of samara town and the
surrounding villages.
As we know Bakery in Ethiopia is still a crucial and valuable activity because
countries like Ethiopia have citizens who want to consume bread more than once a
day. The needs and wants of the people for bread consumption in samara town
grow from time to time that enables us to open/start the new bakery business
project in the town specially in logia.
In reality, Bakery project can cause less environmental pollution because it can be
baked by electricity. This enables us to get our license from the government of the
country and the administrative office of samara town. Thus, government allows
this kind of project to enhance the access bread for dwellers by encouraging the
newly open business firms and already existed business organizations in Bakery
project.
There are formal and informal as well as legal and illegal baking and selling of
bread in the country as a whole including rural and urban areas. However, we
prefer our project to be formal and legal one because we can distribute our product
and compete as we want without price fluctuation ( i.e. by setting our price
affordable for the people) and enables us to accumulate our own capital by
providing and diversifying our production level through maintaining our clients
wants and serving them in satisfied ways.

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I Introduction
1. Company description of new Bakery
The establishment and construction of new bakery is in samara town, samara as a
basis for production and distribution of bread. In this area, the idea of establishing
this business is penetrated in many of owners mind and appropriate to establish the
business. From the beginning the business is formed in the form of partnership
with equal capital accumulations. The accumulated capital; used for beginning the
business is 500,000 ETB which 80% is funded by partners and the remaining 20%
is borrowed from other financial institutions as a loan.

Top bakery (TB) engaged in providing quality product at fair market value for its
clients. From the beginning the business attempt to distribute its products through
different distribution center that it will open. During the first establishment, the
business purchases necessary raw materials from surrounding factories.

1.1Objectives of new Bakery

Generally, new bakery aims to:-

 Increase its customers and production level throughout times to

increase its return.
 Satisfying the customers wants as an essential for the business
survival and competition.
Specifically, the new Bakery aims to:-

 Provide the product through different distribution center

 Increase the efficiency of current resource
 Offer a quality services attached with selling product
1.2Mission of new Bakery
 To provide quality product at fair market price/value by using quality raw
material supplied by surrounding manufacturing companies.
 To assess the change in current demand and satisfy the customers need to
increase the business proof.
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 1.3 Vision of new Bakery
 To build our Owen flour factory after three years to improve the cost
of production which currently purchased from other factories and to
save different production cost incur associated with transportation.
 To open a new distribution center in surrounding small towns in order
to ensure the profitability of the business.
2. Considerations in Selecting the Project: First of all, the project will
develop to increase the revenues of owners. The main factors in selecting the
project are:-

 The current unbalance between the growth of town and demand for
consumption of bread.
 The Location of former bakery business is mostly concentrated at the
center of the town. So, many people lived around the town face that
has shortage of bread and the existence of enough demand.

3. Location of Project
The project will be located in Samara town Afar in the eastern part of Ethiopia.
This location is selected because of the following considerations:-

 The current expansion of the town to different direction especially around

villages. This expansion in turn brings the increase of demand for projected
business.
 This location will help to approach/easily get/ the raw materials from the
nearest zone/area when the business is constructed its own factory in the
near future.
 Decrease current competitions highly observed in the town.
 Because of easily getting of the license from the government. This will be a
helpful for the business to be free from any problems will occurred if the
business start to build its own factory.
4. Source of capital
From the beginning of establishment the project is financed through individual’s
investment and loans from Banks. Individual partner of a company contributions
for the establishment of the project about 80% of the total capital for the project.

BUSINESS PLAN OF TOP BAKERY Page v

The remaining sources of capital which is 20% of the total capital funded from
banks as loan.

5. Project Layout (Infrastructure): The surrounding of the Top bakery project

will be set in an attractive layout. That means the buildings position for the
convenience for management staffs, easy to safeguard the surroundings for guards
and safe to the Janitors to clean.
S/N Item Size Quantity Purpose

1 Administrative office 8m 1 For administration

&management

2 Baking bread room 150m 2 For baking/preparing

bread

3 Bath room 15m 2 For Washing

4 Material storage class 100m 1 For storing flour and other

materials

5 Class for guards 12m 1 For keeping/safeguard

6 Staffs for employees 50m 1 For resting during

tiredness of employees

7 Class for launch 40m 1 For providing food for

employees

6. Financial Analysis

The project will start the operation with Birr 500,000 birr Out of this 80% of the
total amount of investment is financed by the owners and 20% is from banks as a
loan which will be paid for the next five years. Most of this investment will
expanded on planting the business for future rather than increasing short term gain
of owners. This means some fixed asset of the business may use high portion of the
investment.

The investment arrangement and expenditure expected is preserving on the

following constructive table with its respective category.

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S/N Item/description Measurement Quantity Unit price Total price
1 Land purchase 60X30 - - 76,400
2 Land preparation M2 - - 2,000
3 Building M2 4 - 120,000
4 Plant mach & equip. - - - 25,000
5 Man power & salary - - - 110,400
6 Supplies - - - 14,700
8 Working capital - - - 110, 600
9 Utilities - - - 15,600

10 Other costs - - - 10,000

TOTAL 490,000.00

Building
The proposed project will consists of four different buildings. These are buildings
for the purpose of planting machinery, buildings for the purpose of storing
purchased materials, buildings for management and staffs and buildings for other
purpose (i.e. showering house, bathrooms, etc.).The investment arrangement for
these buildings is presented as follows:-

S/N Description Measurement Quantity Unit price Total price

/Items/
1 Cement Pkt 150 400 15,000
2 Roofing sheet M2 200 120 4,000
3 Nail Kg 10 40 400
4 Doors M2 10 1000 3,000
5 Windows M2 15 400 6,000
6 Labor costs - - - 10,000
7 Electric maintain. - - - 3,000
8 Design costs - - - 10,000
9 Water pipe - - - 10,000
10 Fire controller - - - 38,600
11 Other related material - - - 20,000
cost

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6.1.1 Plant machinery and material costs for production
S/N Description Quantity Unit price Total price
1 Gills 3 3000 9,000
2 Mabukia / baldi 5 150 2,000
3 Plantary mixer 3 2000 6,000
4 Flour sifter 2 500 6,000
5 Working tables with 3 400 2,000
aluminum top

Total 25,000

6.1.2Cost to supplies

S/N Description Measurement quantity Unit price Total

price
1 Wheat Flour Kg 200 650 13,000
2 Salt Kg 200 3.5 700
3 Oil/leaving agent Liter 5 50 250
4 Yeast /camera Kg 20 30 600
5 Edible color & Kg 10 15 150
Flavor
Total 14,700

6.1.3Man power and supplies expense

S/N Position Qualification Experie No. Monthly Annual salary

nce req. salary
1 General BSc in 2 1 2,500 30,000
Manager production
2 Purchaser/buyer Diploma in 3 1 1,500 18,000
purchasing
3 Sales person Diploma in 3 4 1,500 18,000
marketing
4 Baker 10th grade& 2 4 1,000 12,000
above
5 Cashier Diploma in 2 1 1,500 18,000
accounting
6 Janitor/cleaner 6th grade and 0 1 500 6,000
above
Guard 8th grade and 4 1 800 8,400
above

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 Total salary expense 110,400.00

Utility expenses

No. Description measurement Consumption per Yearly cost in birr

month

1 Water Liter 10,000 4,800

2 Electric power Kw/h 15,000 7,200

3 Telephone 250 3,600

Total 15,600.00

Annual costs
Salary expenses………………………………………………..110,400

Interest expenses (96,000x14%).....…………………..13,440

Supplies expenses………………………………………………14,700

Utility expenses………………………………….15,600
Depreciation expenses:
Building………………………………......4,000
Machinery and equip…………………...5,000
Transportation expenses………………………… 9,500
Rent expenses………………………..……………7,000
Total ………….179,640

Depreciation expense- building= Cost_-salvage value = 120,000-0 =4,000

Estimated useful life 30

Depreciation expense- machinery & equip.=25,000-0 = 5,000

BUSINESS PLAN OF TOP BAKERY Page ix

 5

7. Market analysis

Market Size

In the recent period, the bread market showed a better growth rate than in previous
years.
This was mainly because retail price cuts were fewer and less stringent, but it was
also because of the growing importance of added-value products, especially in the
specialty bread and bakery products sectors.

7.1Market Segmentation
Top bakery focuses on the middle- and upper-income markets. These
market segments consume the majority of bread and espresso products.

Local Residents: Top bakery wants to establish a large regular customer base.
This will establish a healthy, consistent revenue base to ensure stability of the
business.

Tourists: Tourist traffic comprises approximately 35% of the revenues. High

visibility and competitive products and service are critical to capture this segment
of the Product : Although the bakery products market grew faster than the
traditional bread sectors and it became to the target of price cuts, and growth
slowed considerably in the past. However, there was something of a recovery and
its share of the total bread market showed an increase through time.

This project, the New Bakery, is planned to satisfy the current needs and wants of
the people around the area which there shows a shortage of bread suppliers in the
near area. The demand for bread shows an increase through time. Because of this
reason we prefer to start the New Bakery project in this area/place. Our sources of
revenues will come from the daily sale of bread.

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9. Demand Forecasting

We expect/forecast our sales by using a quantitative method called trend

projection/time series method that enables us to predict the next annual sales.
Depending on this trend we try to forecast for the next two or more year’s sales as
follows:

Years Estimated annual revenues (00,000)

2014 1.728
2015 2.34
2016 2.52
2017 3.06
2018 3.60

10. Project management

The proposed project will have consolidated management system controlled by the
owners of the project. This enables us to get the profit that we estimate and
minimize the cost of administrative through replace other employees being hired
from outside. Besides, to business owners other employees will be hired on
permanent and contract basis.

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 Guards
Organizational Structure

General Manager

Finance dep`t
Purchasing dep`t Selling dep`t

Production dep`t
Janitors

Bakers Other employees

10.1Major Duties and responsibilities

From the beginning the major activities performed in organization will expect to
done by the owners to minimize the related initial cost and to increase the
profitability of the business.
General Manager will be responsible to lead and control all other employees to
attain the goal of the organization. The purchaser will be responsible for search
market and present the supplies with reasonable market price.
The sales person will be responsible for selling the prepared product by searching
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and attracting a good market segments to increase the share of market. Finance
department will be responsible to prepare and follow up the business budget and
periodic control of cash inflows and out flows. It also responsible to pay the
employee`s salary and wage in time and in accurate ways. These all are the major
responsibilities related to administrative department.
The other major duties are related to production department. Under this department
there are responsibilities to prepare and bake a quality and attractive product for
customers. They will be responsible for the use of the organization`s input
materials and other equipment in proper ways.
In addition to these responsibilities, other employees work in organization will
have different responsibility related to their jobs. These are the responsibility
declared by the organization`s administrative to increase the earning of the
business and to ensure the benefit of employees. These duties are the
responsibilities given to guard, janitors and other contract employees. Guard will
be responsible for keeping the security of the surrounding of the business
organization. Janitors will be responsible to keep the organization clean and make
the compound attractive/ maintain the attractive site in the organization/. They are
also responsible for the proper use of the organization`s property in a cleaned and
safety ways. Generally, imposing these all responsibilities to each individual is
important to keep the business strength and increase the earning of the business
and benefit of employees too.
Top Bakery
11. Income Statement
For The Year Ended March, 2013-2017
2013 2014 2015 2016 2017

Revenues 172,800 234,000 252,000 306,000 360,000

Expenses:
Salary expense 110,400 110,950 120,500 125,500 127,800
Interest expense 13,440 14,100 15,000 16,000 16,950
Supplies expense 14,700 15,000 16,000 16,850 17,100
Utility expenses 15,600 15,750 16,100 16,150 16,900
Depreciation exp:
-Machinery 5,000 5,000 5,000 5,000 5,000
-Building 4,000 4,000 4,000 4,000 4,000
Travel expense 9,500 11,050 12,050 12,900 13,500
Rent expense 7,000 7,000 8,000 8,550 9,000
Total operating 179,640 182,850 196,650 204,950 210,250
expenses
Operating income (6,840) 51,150 55,350 101,050 149,750
Tax 20% -0- 10,230 10,690 20,210 29,950

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 Net income
(6,840) 40,920 42,760 80,840 119,800

Top Bakery
11.1Opening balance sheet
March, 1, 201
Assets:
Cash………………………………………………….…289,760
Investment for:
Supplies………………..………………………….14,700
Machinery..........................................................25,000
Utilities…………………………………….……...15,600
Land……………………………………….……....78,400
Building……………………………………………120,000
Others ……………………………………………..10,000
Total assets………………………………………..……….480,000
Liabilities:
Accounts payable…………………………………………..96,000
Owner`s equity:
Owner`s capital………………………………….……384,000
Total liabilities and owner`s equity………………………480,000

New Bakery
Statement of owner`s equity
For the year ended june 30/2013
Balance sheet meskerem1/2013 capital…………………………384,000
(-) net loss year sene 30/2013…………………………………….(6,840)
Balance on sene,30/2013……………………..…………………377,160

Top Bakery
11.2 Balance sheet
Sene30/2013

Assets:
Cash …………………………………………..206,260
Investment for:
Land……………………………………………78,400
Supply …………………………………………14,700
Machinery………………………………………25,000
(-) accu.deprn…………………………………..(5,000)
Building………………………………………….120,000
(-) accu,deprn……………………………………(4,000)
Utility……………………………………………..15,600

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 Others …………………………………………...15,600
Total assets……………………………………466,560

Liabilities:
Accounts payable………………………………………………82,560
Owner`s equity:
Capital ………………………………………………..……….384,000
Total liabilities and owner`s equity……………………………466,560

Top Bakery
11.3 Statement of cash flow
For the year ended sene,2013

Source of cash 2014 2015 2016 2017 2018

Earnings before interest 20,280 65,250 70,350 117,050 166,700
and tax
Depreciation machinery & 5,000 5,000 5,000 5000 5,000
equip.
Depreciation building 4,000 4,000 4,000 4,000 4,000
Total source of cash 29,280 74,250 79,350 126,050 175,700
Cash out flows
Pay`t of interest 13,440 14,100 15,000 16,000 16,950
Pay`t of tax 0 10,230 11,070 20,210 29,950
Pay`t of long-term loan 19,200 19,200 19,200 19,200 19,200
Total cash out flows 32,640 43,500 45,270 55,410 66,100

Surplus/deficit (3,360) 30,720 34,080 70,640 100,600

Opening balance 0 (3,360) 27,390 72,660 143,300
Cash ending balance (3,360) 27,390 72,660 143,300 243,900

12. Project evaluation

Years Cash inflows Cumulative cash inflows

2014 (3,360) (3,360)
2015 27,390 24,030
2016 72,660 96,690
2017 143,300 239,990
2018 243,900 483,890

13. Environmental feasibility

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As it is known environmental issue is the current critical things which require
detail study whenever any business is attempt to established. This is helpful to
assess the impact of that project on the environment as well. Our project is planned
to engage in production process. Thus, our project is highly concentrated on the
use of electric power/energy to prepare/bake bread. This enables us to minimize
the pollution that our business can cause to the environment if we use other sources
of energy such as wood burning and use of kerosene. In addition to this advantage
the use of this source of power saves the product that our organization can produce
in different ways.
In fact, bakery project doesn`t have any noise and other influence with
environment.

14. Top bakery SWOT Analysis

Strength: Our strength lies in the fact that we have a wide range of products that
can meet the needs of a wide range of customers. Another factor that counts to our
advantage is the background of our Chief Executive Offices; he has a robust
experience in the industry and also a pretty good academic qualification to match
the experience acquired which has placed her amongst the top flight bakers in the
samara town. We are not ignoring the fact that offering consultancy services and
running a standard and accredited bakery institute is definitely going to count as a
positive for us.

Weakness: The fact that we are setting up a bakery business in a city with other
bakeries might likely pose a challenge for us in breaking into the already saturated
bakery business in super market of samara logia and other bakery. Nevertheless,
we have plans to launch out with a big bang. We know with that, we will be able to
create a positive impression and we have a proper handle when it comes to
building on already gather momentum.

Opportunities: The opportunities available to us are unlimited. Loads of people

consume breads, cakes and snacks on a daily basis, and all what we are going to do
to push our products to them is already perfected. There are also loads of people
who might want to learn how to bake; as a result, they can readily find our
government approved bakery institute highly ideal for them to fulfill that goal.

Competitive Advantage: There is hardly any village in samara city and perhaps
in other parts of the city where there isn’t at least one bakery. our competitive
advantage in the market place. One of our competitive advantage is that we are one
of the few bakery companies that is not only involved in the sale of breads, cakes
BUSINESS PLAN OF TOP BAKERY Page xvi
and snacks but also operate a government accredited bakery school where
professional bakers are hatched and sent forth to start their own bakery business or
manage their homes properly.

15. Pricing Strategy: Part of our strategy for entering the market is to leverage on
pricing in gaining a good percentage of the available market. The fact that we are
going to be selling our products a little bit below the market price does not in any
way mean that we will compromise our quality and quantity.

As a matter of fact, we have perfected strategies to ensure that we are shoulders

higher than our competitors in terms of quality and quantity. The prices of our
products will be the cheapest anybody can get in the whole of samara and the cities
where we intend establishing our bakeries.
16. Advertisement of product

Design business cards, flyers and signs. We Use a computer software program or
ask a local printer to design and print various business advertisements.
Communicate information about our bakery, including name, location and phone
number. Make note of special items our bakery offers, such as wedding cake
design and catering. We add pictures of your baked goods for greater allure.

17. Risk assessment

The risks for top bakery are there might be natural problem like: over Temperature,
shortage of enough water, long way for transportation and social problem like
peoples of that town have compliant for their treats about environmental pollution.
we cannot control natural disasters because they are uncontrollable but we can
control human made disasters by creating awareness on our employees we are
going to insure our assets by giving insurance.

18. Project implementation

In fact, at this stage there are different challenges that arise from evaluation of a
project. A project evaluated it is difficult to implement but with support if other
advisory and consultants who try to evaluate our project. We can conclude our
project as follows:
 Although some fixed assets require high cost at the beginning it
enables to plan the project for future on good ground.
 As the current earning of the project can cover all related expenses
and yield profit to owners, the length of period to cover initial cost
never frustrate the project from implementation.
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When we decided to implement our project by using differ methods and as well
we expect some difficulties at this stage. Some of them are:
 Technical problem related materials.
 Shortage of distribution point.
 Unfamiliarity with customers. This may affect the test of market during
implementation.

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